Observations and provocations from The Times' Opinion staff

Medicare and campaign ads, courtesy of Karl Rove

October 19, 2010 | 6:21
pm

The Times' editorial board blasts the amount of money flowing into the campaign from anonymous donors, calling not for more limits on campaign cash but for more disclosure. If the past is any judge, that's not a partisan position -- Republicans have traditionally been the champions of disclosure, although Democrats seem to be the louder advocates now. The torch passes back and forth, evidently in the opposite direction from the flow of big anonymous donations.

You would think Californians would be particularly receptive to the notion of donor disclosure, given how the state's laws have effectively exposed the special interests -- be they unions, out-of-state oil companies or wealthy insurance magnates -- behind ballot measures. But some readers of the editorial took issue with the example it cited, a "misleading" commercial that Crossroads GPS (a conservative group advised by Republican strategist Karl Rove, pictured above) has run against Sen. Barbara Boxer (D-Calif.). Here's the excerpt from the editorial:

"California seniors are worried. Barbara Boxer voted to cut spending on Medicare benefits by $500 billion, cuts so costly to hospitals and nursing homes that they could stop taking Medicare altogether. Boxer's cuts would sharply reduce benefits for some and could jeopardize access to care for millions of others, and millions of Americans won't be able to keep the plan or doctor they already have. Check the facts and take action. Call Boxer. Stop the Medicare cuts."

Two readers, "LanceE77" and "chardest," argued that the commercial spoke the truth. Wrote chardest:

The bill DOES include as savings the $HALF TRILLION in cuts to Medicare. This "savings" was needed to "reduce" the cost of the bill and keep it under, at that time, $800 bill[ion].

The reality is that the bill doesn't cut Medicare benefits a dime and doesn't "jeopardize access" for anybody, although it may very well force plenty of seniors to change the plans they're on. It also puts Medicare on sounder financial footing, postponing insolvency for about 12 years.

First off, the Congressional Budget Office calculates that the law will reduce projected Medicare spending by $390 billion over 10 years, an amount that factors in $70 billion worth of benefit increases that critics usually ignore (such as closing the prescription drug "donut hole" and eliminating out-of-pocket costs for preventative services). No small amount, granted, but not half a trillion dollars.

Second, about half the net "savings" in the bill will come from slower increases in the payments to hospitals, clinics and other providers of care (excluding doctors). Instead of increasing these payments to keep pace with the Consumer Price Index, the bill calls for the inflationary adjustment to be trimmed to reflect the average productivity increases made by U.S. businesses.

It's odd to hear Boxer's critics refer to a spending increase as a cut, given that they normally criticize that sort of logic. Anyway, the change affects only "fee for service" rates, which should help move the industry away from the fee-for-service business model (which gives providers an incentive to perform more procedures on the sick) toward models that reward them for keeping patients healthy.

Third, an estimated $135 billion in savings is projected to come from bringing subsidies for Medicare Advantage into line with those for the regular Medicare program. Medicare Advantage was created in the hope that private insurers could deliver more value at lower cost than the government. And it's true that Medicare Advantage plans have better features than standard Medicare -- typically, lower co-payments or coverage for more types of care. But it costs the government more than $1 to deliver $1 worth of subsidy through Medicare Advantage. That kind of inefficiency is hard to defend.

The changes in Medicare Advantage subsidies are likely to prompt insurers to reduce some of the extras they offer or stop offering those plans altogether. And that's going to affect millions of seniors who've signed up for Medicare Advantage, trading the convenience of standard Medicare for some extra features. But the law does not reduce the benefits that Medicare provides. Again, it just affects the add-ons from Medicare Advantage, which costs the taxpayers more than standard Medicare does -- contrary to lawmakers' hopes and expectations when they created the program.

This is complex stuff, which makes it difficult to convey to the public in a 30-second ad. But the Crossroads GPS commercial offers not a simplification of what Boxer voted for; it's a scary caricature.